Patrick Fleenor, Chief Economist of the Tax Foundation and author of “Cigarette Taxes, Black Markets, and Crime: Lessons from New York’s 50-Year Losing Battle,” said in an opinion piece published in the Wall Street Journal that New York State’s politicians of both political parties are ignoring the “blunt fact” that New York’s high cigarette excise tax rate, which will rise another $1.25 to $2.75 per pack on July 1, has led to a “bloody, decades-long smuggling epidemic.” Fleenor said much of the cigarettes sold in New York State will be trucked up from Virginia or shipped from China by “butt-leggers” who can make over $1 million per tractor-trailer load of smuggled cigarettes.

Fleenor said tax hikes in the early 1960s created a high profit opportunity for smugglers and by 1967, 25% of the cigarettes consumed in the State were bootlegged. High inflation in the late 1970s and early 1980s drove up cigarette prices, but the excise tax remained unchanged, thereby reducing smugglers’ profit margin and therefore related crime, Fleenor said. When lawmakers began raising the cigarette tax again in the 1980s and the 1990s, smuggling and large-scale tax evasion both surged, he noted.